Commodity Pool (Managed Futures Funds) Definition

Forex Glossary

Definition

The term product pool describes to a enterprise consisting of investors blending their capital to trade futures and options as one thing. Commodity pools enable investors to acquire leverage when reducing risk.

Explanation

Also known as managed futures commodity pool is a valid term defined by the National Futures Association. The Commodity Futures Trading Commission (CFTC) and the National Futures Association govern the performance of pools.

Commodity pools are often times in comparison with mutual funds simply because they allow individual investors to pool their own capital and run trades which will otherwise be impossible. Since the shareholders ‘ funds is spread over a larger number of trades, commodity pools can also reduce risk through diversification. Unlike mutual funds, however, commodity pools are private enterprises. Hedge funds are oftentimes commodity pools, and as such, must be registered with the CFTC as a commodity trading advisor (CTA).

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